Art Law Report

Does Jenack Decision Really Require Disclosure of Seller’s Name? Yes, if the Buyer Won't Pay

Posted by Nicholas O'Donnell on November 6, 2012 at 11:00 AM

The Jenack decision addressed recently at the Art Law Report has been the subject of intense comment and criticism since being widely reported.

Donn Zaretsky’s roundup of the commentary raises an interesting and important question, with analysis from Jonathan Olsoff of Sotheby’s and Jo Laird, former general counsel at Christie’s. Namely, does the decision actually require "disclosure" of the seller as has been widely reported without further context? Olsoff, via Zaretsky, makes the excellent point that another document (e.g., in the files), taken together with the invoice, could together satisfy the Statute of Frauds (New York General Obligations law § 5-701). This is common in many contexts that have nothing to do with art: if one person sends a letter agreeing to the terms written on another document, those forms can be taken together to satisfy the Statute of Frauds. Here, a document in the files (which the auction house most certainly has with its consignor) could be put together with the anonymous form (e.g., “consignor 428”) to satisfy the Statute of Frauds.

This is a case of both sides being right because they are talking about slightly different things. The decision does not say that an auction house has to disclose the seller as a matter of course. To the extent that reports have simplified it in that way, the criticism is correct, and a welcome clarification. The decision does say, however, that if the auctioneer wants to enforce an agreement against the high bidder who won't pay, the seller’s name is part of that contract and it cannot claim “ordinary practices” a defense to disclosing the seller’s name. So a future high bidder that complains that the invoice doesn’t have a seller on it cannot simply walk away from its obligations, but by the same token, if the auction house wants to hold up the sale, it will have to show the buyer whatever is in the files that proves a binding offer by the seller/consignor.

It’s also being reported that Christie’s is joining with Jenack in some way to appeal the decision, although no motion for leave to appeal appears yet on the Court of Appeals website. In New York, a litigant needs permission from either the Appellate Division whose decision is contested, or the Court of Appeals itself, to have the state’s highest court review the case. Jenack can seek that leave sequentially (i.e., ask the Appellate Division first, then the Court of Appeals if necessary), arguing that an important question of law is at stake. Christie’s would have to either move to intervene in the case, or submit an amicus brief to the Court of Appeals. This story is clearly far from over.

Topics: Donn Zaretsky, New York General Obligations Law § 5-701, Appellate Division, New York Court of Appeals, Jonathan Olsoff, Jo Laird, Christie's, Statute of Frauds, William J. Jenack, Sotheby's, Art Law Report

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